For a more in-depth analysis of trends shaping the industry in the second half of 2025, find our full trends report here.

The healthcare industry continues to face rapid transformation, with financial, technological and operational pressures reshaping how organizations deliver care. CommerceHealthcare^® has identified key mid-year developments that are influencing strategic decision-making across the sector. The year to date can be characterized by the following:

Fresh uncertainties and persistent “structural” issues cloud the industry’s generally improving financial health.
There is ongoing commitment to automation and technology investment.
Patient affordability pressures fuel the need for financial assistance programs.
Migration from status quo operational models to substantially new ones is paramount.

Financial update.

A scan of leading metrics reveals both the progress and the prevailing challenges:

Profitability. Through April, hospital margins are running near or above 3% versus the mid-1% range throughout 2024.¹ Smaller hospitals continue to struggle in 2025, as do physician groups. The median investment (loss) per physician full-time equivalent stands at an annualized $347,240 — a 4.8% increase compared to 2024, and a 16.3% jump from 2023.”²
Revenue/volume. Larger hospitals experienced 24 consecutive months of year-over-year (YOY) growth through April in gross operating, inpatient and outpatient revenues.
Cash. Days cash on hand varies widely across health systems.

Several ongoing structural impediments to financial health loom large for the second half of the year.

Government funding cuts.

The proposed Medicaid changes being debated in Congress are a major concern. While not in the purview of this report to predict outcomes, it’s helpful to remember these changes also come on top of additional funding cuts — the expiring Affordable Care Act subsidies starting in 2026, and reduced research grants.

Unfavorable cost trends.

Increases in several cost categories are proving hard to tame. A notable one is drugs. Clinic spending is projected to grow 11% to 13% in 2025, while hospitals will increase 2% to 4%.³ Several high-profile initiatives are taking aim at reducing pharmaceutical costs. One is major online pharmacy “disruptors” such as Amazon and Mark Cuban Cost Plus Drug Company. These firms seek to offer patients substantially discounted medications at scale and with high convenience. Another effort is newly-intensified government pressure on pharmaceutical manufacturers to lower prescription drug prices.

Labor shortages and disruptions.

Labor represents another structural problem. Turnover fell in 2024, but the overall hospital rate is still 18.3%.⁴ Critical shortages are projectedfor the next decade or more. The RN shortfall will be almost 208,000 FTEs by 2037.⁵ The long-term services workforce will need 950,000 additional people by 2037.⁶

Facilities projects.

Hospital facility construction is taking a larger share of 2025 capital budgets.⁷ Physical plants are aging, and forecasters see a looming bed shortage that will need to be addressed.

The search for growth.

Nearly two-thirds of healthcare executives entered this year with a leading priority of developing revenue growth strategies.⁸ Telehealth, Hospital at Home (HaH), and mergers and acquisitions top the list.

Patient financial experience update.

Financial strain remains a defining aspect of the patient experience. Affordability concerns continue to intensify, underscoring the importance of expanded payment support and cost transparency:

64% expect to pay more for healthcare in 2025.⁹
31 million Americans borrowed an estimated $74 billion in the past 12 months to pay for healthcare, and 58% of them assumed debt of $500 or more.¹⁰
3.5% is the projected average annual growth rate of per capita out-of-pocket spending from 2025 to 2032.¹¹

Meeting the need with patient financing.

The demand for patient financial assistance will stay elevated. Nearly nine in ten hospital websites show available payment plans.¹² The gold standard is a no-interest line of credit for significant amounts and longer terms to accommodate a range of patient scenarios.

Making the financial journey better.

Overall patient financial engagement is improving, but work remains. Surveyed patients still experience care delays due to insurance verification issues (22%) and struggle with medical record or billing information errors (20%).¹³ Positively, more are receiving upfront price estimates of service (41%).

Technology and automation update.

The intensity of commitment to financial technology is a significant theme. Many finance leaders say they look for a technology product or service to generate revenue that exceeds project launch costs by three times.¹⁴ These technologies are gathering momentum:

Process automation.

The latest CAQH Index identified an $18 billion savings opportunity from fully automating major administrative processes.¹⁵

Artificial intelligence.

AI, especially generative AI, is clearly top of mind for healthcare leaders. Sixty percent of respondents from provider, payer and pharmaceutical organizations say their AI budgets are growing faster than overall IT spend.

Digital payments.

Healthcare is poised for 21% compound annual growth in credit card and digital payments through 2034.¹⁶

The cybersecurity overhang continues.

In a poll of healthcare IT executives, 30% ranked cybersecurity their top 2025 priority. Just over half of respondents placed cybersecurity atop the list of healthcare’s business sectors most in need of a digital strategy.¹⁷

New vulnerabilities.

Generative AI is being deployed to “impersonate clinicians, defeat voice authentication, bypass smart locks and manipulate surveillance systems.” Only 18% of survey respondents have a strategy to mitigate such threats, and 71% aren’t prepared for tactics such as deepfake badge credentials or sensor spoofing.¹⁸

New care and business models update.

Many believe the industry must radically rethink partnerships, risk-based models and the role of technology.

Leadership requirements.

One talent firm believes today’s growth environment demands “a scientific engineering” mindset from CEOs, who will need “a deeper understanding of healthcare delivery mechanics and technology applications.”¹⁹

Retail health partnership potential.

This year is witnessing new meaningful partnerships between retail health companies and traditional organizations. Amazon’s One Medical has recently forged new alliances with health systems, and CVS announced a $20 billion, 10-year investment to build an integrated care platform that could include traditional providers.

Conclusion.

The progress is encouraging on the financial, patient finance, technology and new business model fronts. But as this report’s title underscores, new uncertainties have clouded the 2025 horizon and added risk. Leaders will again be performing a difficult balancing act among many priorities and will be looking to harness exciting technologies to address structural issues and bring about the substantial change everyone seeks.

For

CommerceHealthcare^® solutions are provided by Commerce Bank.

1. Kaufman Hall, “National Hospital Flash Report,” June 2025.

2. Ibid.

3. L. Lutton, “Outpatient Pharmaceutical Spending to Outpace Hospital Pharmaceutical Spending in 2025,” Managed Healthcare Executive, May 28, 2025.

4. Nursing Solutions, Inc., 2025 NSI National Health Care Retention & RN Staffing Report, 2025.

5. National Center for Health Workforce Analysis, “Nurse Workforce Projections, 2022–2037,” November 2024.

6. National Center for Health Workforce Analysis, “Long-Term Services and Support: Demand Projections, 2022–2037,” November 2024.

7. Health Facilities Management, “2025 Hospital Construction Survey,” Mach/April 2025.

8. Deloitte, 2025 U.S. Health Care Outlook, December 2024.

9. Harmonyhit.com, “Report: 1 in 3 Americans Plan to Skip Doctor Appointments to Save Money in 2025,” September 25, 2024.

10. Gallup, “Americans Borrow Estimated $74 Billion for Medical Bills in 2024,” March 5, 2025.

11. KFF and Peterson Center on Healthcare, “How Much is Health Spending Expected to Grow?” October 7, 2024.

12. S. Randall, N. Wong, J. Rohrer, et al., “Prevalence of Medical Payment Products Promoted on U.S. Hospitals’ Websites,” JAMA Health Forum, March 29, 2024.

13. Experian Health, 2025 State of Patient Access Survey, April 2025.

14. D. Rebernik, “RCM Solutions Are on The Rise. Here’s What It Means For Rev Cycle Leaders,” HealthLeaders, February 17, 2025.

15. CAQH, 2024 CAQH Index, February 12, 2025.

16. Precedence Research, Healthcare Digital Payment Market Size, Share, and Trends 2025 to 2034, February 2025.

17. HealthLeaders. “Intelligence Report: How Digitization is Defining Healthcare,” December 2024.

18. Black Book Market Research, 2025 Healthcare Cybersecurity Survey, May 20, 2025.

19. Witt Kieffer, Healthcare CEO Reimagined, March 31, 2025.

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